It's not easy to thrive as an independent financial advisor these days. Not only does the independent face the same challenges confronting everyone trying to eke out a few extra basis points in return in an uncooperative market, but he also has to match the increasingly high levels of service and product variety of his biggest rivals. And if he is to truly stand out, the independent must do all that while simultaneously retaining the "high touch" element that has always been the hallmark of a good local shop.

The folks on Barron's annual list of the top 100 independents financial advisors are clearly rising to the occasion. The group's assets under management have grown at an average annual rate of 22% over the past five years, the result of solid investment returns and a goodly dose of new business. The advisors, typically backed by teams of about 36 people, increased their assets by 12% in the year through June, to an average of $3.1 billion.

Charles Brighton is a classic example of a local advisor who expanded his business geographically, but with a clear plan to retain the personal touch. After Brighton and partner John Jones formed Brighton Jones in Seattle in 1999, they drew new millionaires emerging from Microsoft and being spawned by IPOs of local firms like Amazon.com. Today, Brighton's firm has three offices in addition to the original -- in San Francisco; Scottsdale, Ariz.; and on the other side of the country, in Washington, D.C. To keep the firm's original flavor, each of the new offices features a veteran of the Seattle office and a strong, local advisor with a network in the new community.

Ingenuity like that has helped keep Brighton and the others on our list a step ahead of the thousands of other independent advisory firms across the country. The list includes 17 new members since last year's roster was published, and some notable jumps in the ranking by returning advisors. Ric Edelman, of Fairfax, Va.-based Edelman Financial Services, moved up from No. 2 to grab the top spot from Steve Lockshin of Convergent Wealth Advisors of Los Angeles. Peter Mallouk of Creative Planning in Leawood, Kan., shot up to No. 4 from No. 10. Richard Burridge Jr. of Chicago's RMB Capital Management went all the way from No. 72 to 24.

The top 100, drawn from 350 nominations, are ranked in part on the assets under management by each advisor's team. We also consider revenue generated by the team and the overall quality of the practice. Investment performance is not an explicit criterion, because clients' investment goals vary widely. In many cases, the objective is preservation of wealth, rather than market-trouncing returns.

Some of the leading advisors are managing to expand their businesses far beyond their local roots. Lockshin's Convergent, for instance, is not only in Los Angeles but also New York; Potomac, Md.; and Portland, Ore. It has clients in Florida, Texas, Boston, and Chicago. "I don't think that being seen as local is all that important, or as important as it might have been once," says David Zier, who works from his Potomac office and is ranked No. 6. "We would travel to New York to visit clients there before we opened that office. The fact is that people that want unbiased, independent advice will gravitate to firms like ours."

Scott T. Hanson of Hanson McClain Advisors in Sacramento, Calif., has been trying to replicate the local touch in markets across the country. He has built a network of some 80 advisors who follow his firm's strategy. "All of them are independent advisors with their own practices and their own local clientele made up of middle-class folks preparing for retirement," he says. What they all have in common, he explains, is their quest to offer top-flight investment products and ideas -- and an interest in tapping into the marketing and back-office support that Hanson McClain can offer.

John LaPann's life is slightly simpler. Based in Boston, he says that "it's possible to build a boutique business without having to venture out into other markets, and we can retain our focus on our clients and on developing customized advice for them." His firm, Federal Street Advisors, has only one office, in downtown Boston. However, from there, he and his team work with clients throughout the Northeast and in Florida, where some members of the affluent families he serves live.

"One way or another, these people have a base in the Northeast; we work with a family foundation based in New York, but whose operations and trustees are all over the world," he observes.

Investors continue to gravitate to the business model offered by independent advisors, but the indies on our list are all too well aware that the trend could halt or reverse if clients feel they are being asked to accept fewer investment ideas or lesser service than they'd receive from a big Wall Street firm.

Here is how five of these advisors are trying to meet their clients' varied needs:

Scott T. Hanson

BEGINNINGS Ran a tree-trimming business while in college, then worked as an advisor for an insurance company before opening Hanson McClain in 1993.

KEEPING HIS COOL Was hiking the Inca Trail in Peru when the 2008 crash hit. "We could see the headlines, but reacting to them would have been a bad idea." Always best to first take a breath, he says. The sight of ancient ruins helped him keep perspective.

ALIEN GREENS "I live in a golf community, but I've never been on a golf course."

Unlike most top-level financial advisors, Hanson's objective isn't to help the ultra-wealthy get even richer, but rather to assist the middle class with the often intimidating challenge of preparing to retire. "We work with everyone from people who have been pole climbers for the local utility to a few folks with very high net worths, but we figure we can make the most difference to the middle class," Hanson says. Those are the people who make mistakes more often -- and for whom those mistakes can be devastating. Hanson's typical account, $500,000, is far below the multimillion-dollar portfolios usually handled by his peers.

A key part of the strategy is getting his clients to the point where their homes are fully paid for and their 401(k) or other retirement plans are being funded. After that, he says, it's all about a client's spending. "If people get a handle on outflows, they don't need as much in terms of inflows," he points out. And in the current climate of low yields and generally paltry returns, that's a good thing.

Still, telling clients that they have to change their open-handed ways, fund their savings account first, and live on what is left is rarely a popular message. "People don't want to hear this; I did have one client tell me he'd rather have a root canal than listen to the kind of advice I had to give him." Still, he says, "the prospect of [being unprepared for] retirement frightens them" even more.

Hanson's own anxiety revolves around the prospect of future inflation: "It makes us very wary of the fixed-income realm, for the most part." In fact, Hanson doesn't see very much in the way of investment opportunities in any market now. "We do think that the real-estate market will have a good comeback -- but how do you make those plays?" There are a few publicly traded real-estate investment trusts that offer some potential, he thinks, but that's about it. This question is particularly difficult for Hanson and his team members, who tend to confine themselves to mutual and exchange-traded funds to execute investment strategies for clients. "We don't do any private placements or limited partnerships, as a matter of principle," he explains. "With hedge funds, by the time you strip out the fees, you won't have a return much higher than you would get elsewhere."

While the team works primarily with clients in the Sacramento region, Hanson has formed a nationwide network of independent advisors. All members of this group also cater mainly to middle-class retirees or those in their 40s and 50s and preparing for retirement. Hanson McClain provides education, along with marketing and back-office support, and it shares revenue with the partner firms.

The goal, he says, is to expand the services and the concepts that underlie his firm's own process without stretching its resources to the breaking point. "Growth comes from partnerships, rather than from opening new offices in locations we're not as familiar with," Hanson explains. "A lot of people in our target group need a financial advisor, but don't work with one yet, so our goal is to reach them this way. We are passionate about the idea of working face-to-face with someone in the client's local area, and especially with someone who is independent."

Many people, he notes, don't have the kinds of assets that require a financial advisor, but still need basic guidance. That's why he does a weekly call-in radio talk show, covering a host of common topics, like interest rates and the bond market. Called Hanson McClain's Money Matters, it is broadcast from Sacramento.

These days, Zier's father listens to him when it comes to stock-picking and investment tips. Decades ago, it was the other way around. When he was 12, his father's advice that he buy Becker Industries cost Zier half his $2,000 investment (money earned by mowing lawns) and spurred a firm resolve to understand financial markets.

Now that he's older and wiser, Zier accepts that knowledge like that can be elusive. "The market is always changing; it's like a puzzle or a game that you can never win because someone rewrites the rules or hides a piece, and you have to go back to try to figure out what has happened," he says. "But at least I now feel that I understand the principles and how it works."

Zier has emerged from this process as a believer in the importance of long-term investing, rather than short-term thinking. Just because today's financial markets are volatile doesn't mean that investors can afford to sit on the sidelines waiting for things to calm down, in Zier's opinion. "We feel that you have to invest, if only to try to preserve your purchasing power," he says.

Inflation is one big risk, as is the direction of the U.S. dollar, and that's one reason Zier currently is using commodities to diversify his clients' portfolios. At the same time, he's trying to ensure that most of them keep an underweight position in traditional fixed- income investments, betting that interest rates will stay low for a while. He believes that the mortgage-bond market, however, offers opportunities; he's been buying issues yielding 6% or 7%. "If delinquencies rise twofold, we'll still make a positive return," he says. "If they get better, we could see yields of 9% or 10%."

Valuations in parts of the global-equities market also are at such attractive levels that it's hard to pass them up. In particular, Zier finds the emerging markets attractive, noting that they're trading at 10 times trailing year's earnings, down from an average of 14; on the same basis, the Standard & Poor's 500's multiple stands around 14.

"True, China may slow because Europe isn't consuming as much, and that may be the case for the next year or two," Zier says. "But the way we look at it is that we're buying assets cheaply, and we have a long-term investment horizon." But he is equally happy investing in what he calls "stodgy, slow-growing companies," even if they don't generate tremendous growth in a portfolio. "You have the dividends–and those remain very, very attractive in times of uncertainty."

LaPann may be a contrarian at heart, but he shares the crowd's frustration with today's investment environment. "The overwhelming problem is a straightforward one: How do we find our clients the return they need in financial markets that just aren't offering that kind of return?" An investor who must spend 3% of his assets annually for retirement needs to earn 8%, pretax, LaPann calculates -- 2% for taxes, 3% for cash needs, and the remaining 3% for reinvestment, to ensure that the portfolio can keep up with inflation. "Nothing is getting them there," he says, simply. "So, how can we get as close as we can?"

The process starts with focusing on investing for the longer haul, not the short term. True, in the aftermath of the financial crisis, relatively frequent tactical asset allocation has become more popular among advisors -- they're trying to capture gains from the rapid-fire shifts in market sentiment. Not LaPann. "We have yet to find a manager who can accomplish that in practice on a consistent basis, so it is a bit of a trap for most of our clients."

That's not to say that LaPann looks askance at novel products or strategies. Currently, he is considering investing in a fund established to acquire "side pockets" created by hedge funds to hold stakes in illiquid private companies. When investors sell these alternative funds, they may still be stuck owning a stake in such side-pocket vehicles. The private fund that LaPann is weighing buys those side-pocket stakes directly from former hedge-fund investors, sometimes with the help of the hedge funds themselves. It's a chance to buy high-quality private investments in their later stages, at a discount price, LaPann says.

At the other end of the spectrum, LaPann is hiring managers to scour the landscape for companies that are growing sustainably at a more rapid clip than the global economy. One is Swedish radiation-therapy equipment manufacturer
Elekta
(ticker: EKTAF), which is benefiting from demographic trends that range from an increase in the rate of cancer among aging populations, and growing prosperity in the emerging markets, where more patients now can afford advanced therapies.

"We want to make sure that we have identified managers who have a good record of finding companies like that in interesting places; who are idiosyncratic, contrarian, or simply looking for opportunities in parts of the market that the rest have abandoned," he continues.

Still, as with most independent advisors, LaPann runs a business whose core mission remains providing advice not just on nitty-gritty investment products, but on the broad issues that revolve around wealth. "At the end of the day, for most people, it boils down to the question of what this money is going to do for you, or do to you?"

The issues are a lot easier for investors to address if their advisor is easy to reach. If a client is worried about something, or needs urgent advice, LaPann says, one of the company's advisors can be with them in only about an hour. "We help them through transitions, from owning a company to essentially becoming their own investment company now that they have had this liquidity event," he says. "In some cases, we're now working with the grandchildren of clients who worked with us."

Rob Francais

WHO NEEDS GRADES? Francais's lowest grades in college were in accounting and taxation -- but he ended up as a tax partner at Deloitte before moving on to Aspiriant.

FAMILY MATTERS An entrepreneur asked Francais to help him identify which of his two sons, rivals since childhood, was best-suited to take over the reins at the family-owned firm. "One of the sons called one of the interviews I did 'The Spanish Inquisition,' " he says. The transition was successful and all the family members are still speaking to each other. "

CUTTING OFF THE TAIL Tail risk -- the danger of sharply lower returns -- can be costly to deal with on a client-by-client basis, so Francais crafts protection that covers all his clients at once, using their aggregate assets to drive down the cost of such risk-management products to affordable levels.

Francais got into the investment-advisory business through a back door. Working as a tax partner for Deloitte in the 1990s, he relished solving complex puzzles for his clients, typically families selling their businesses and dealing with the tax consequence. He soon realized that the decision to sell or not had little to do with the numbers. "It's about liquidity and what that means for you and your family," he says. "That was news to me at the time." When the transactions closed, Francais often ended up being invited to meetings at which family members tried to decide how to invest the proceeds from the sale of a business. "If you ask people in this position what they want to do with the wealth, most of them haven't thought of an answer."

While Francais's firm provides investment guidance as part of its suite of services, he still believes that it's far more important for families to develop analytical skills that help them make decisions about issues such as who will inherit a business or even simply how to make such a decision.

Whether he is working with clients on an investment choice or the transition of a family business, he sees emotions overwhelm analysis time and time again. Says Francais: "Entrepreneurs are good at making money, and taking risks, but not good at preserving wealth," he says. "Dealing with that issue upfront is a skill that an advisor needs to develop."

While Francais tends to be optimistic about the long-term investment horizon -- "there are seven billion people in the world waking up every morning and wanting tomorrow to be better than yesterday was" -- he's all too aware of the shorter-term problems like the slowdown in the global economy and super-low interest rates. And many investors are still smarting from the 2008 financial crisis and wondering how to avoid another pounding. To Francais, that's an opportunity to offer some education. "We can simply say: 'With this asset allocation, here is how your portfolio would have done in those weeks during the autumn of 2008,' " he says. "It brings the question of risk to life."

Charles Brighton

HIGHFLYING CLIENT Brighton's clients include a Boeing engineer who designed the iconic 747 jet. He's still at Boeing at about age 90.

BIG OPPORTUNITY Emerging markets are way off their highs, he notes, and historically they've posted some of their biggest gains after a crisis or selloff. He points to Mexico after the '94 peso crisis, and Indonesia following its crisis of the late '90s.

BEETLE MANIA After one client became a multimillionaire in her early 20s following Amazon.com's IPO, she called Brighton from a VW dealer to ask if she could afford to make a purchase. He gave her the green light.

As a teenager, Brighton saw people in his parents' well-off social circle–Ivy League-educated, working as professionals–make big financial errors. So he resolved at an early age that he wouldn't do the same.

He went a step further when he joined what is now Deloitte LLP in the early 1990s and began advising others. He's been refining his approach ever since. He opened his own firm with partner John Jones in 1999, and soon found a way to stand out from the pack. "We were early when it came to blending tax advice with investment advice; nobody seemed to be doing that," he recalls.

It's always better, he says, for an investor to seek advice ahead of time than it is to scramble for help to handle the consequences. That's something Brighton witnessed working with employees at Internet start-ups in the first days of his firm. "The early months were great; all these companies had 26-year-olds worth millions on paper." The problem? Many of those millions evaporated overnight when the dot.com bubble burst, leaving many of those 20-somethings with few assets but big tax liabilities. Brighton had warned the temporary millionaires who had begun working with him of the dangers of single-stock concentration and leverage, and cautioned about exercising stock options, holding the stock and then spending on margin on the assumption that the shares would just climb further.

These days, savvy entrepreneurs are more aware of the tax consequences associated with exercising options, and more advisory firms like Brighton Jones offer this kind of guidance. Still, tax-based investment advice is a key part of Brighton's service. "If I can save a client 20% in taxes, well, that's like earning him 30% on his investment portfolio, which is something that absolutely no one can promise to accomplish in this environment," he says. "Tax is immediate and has definable results." And in the risky market of today, that is doubly important. "There is inflationary risk, market risk, dollar risk," he warns.

Brighton tries to insulate through diversification and planning. The process starts by quantifying a client's cash needs and putting the funds for that in a "supersafe" portfolio. He also recommends a "diversifier portfolio" that invests in asset classes designed to hedge against risk. Today, that means everything from commodities to inflation-protected Treasury securities.

Despite their enormous runup over the past decade, Brighton is still a fan of bonds. "We aren't even thinking about taxes and those advantages when it comes to munis. You do have to do careful credit analysis, but these are now attractive in their own right."